While three million households receive some form of ongoing financial assistance for their energy bills, the poor design and implementation of the assistance means too many people still can’t afford the energy they need, according to Reforming electricity concessions to better meet need, a report released this week by the ACT Council of Social Service (ACTCOSS), the Australian Council of Social Service (ACOSS), and other partner social service organisations.

“People who face disadvantage are disproportionately impacted by rising energy costs and spend a greater proportion of their incomes on energy bills,” Dr Emma Campbell, CEO of ACTCOSS, said. “It is critical that the government review energy concessions to ensure they are sustainable, targeted and adequately respond to need.”

Too many people, the report finds, deprive themselves of energy – taking fewer showers, cooking less, not heating or cooling their homes, or going without food, medicine, and other essentials to pay energy bills – and still find themselves in energy debt, with no way to pay debt down.

Providing energy concessions and annual rebates as a fixed amount means they do not respond to energy price changes, seasonal variations in energy use, or the energy performance of the home, the report continues. It also means that some people are getting more assistance than they need, and others are getting significantly less.

Many of these concerns raised in this report were raised by the Australian Competition and Consumer Commission (ACCC) in 2018. Its recommendations have not been acted upon.

The report recommends shifting to a percentage-based concession or rebates (such as the régime in Victoria) which means support can be adapted to need and circumstances, and changes in the energy market and technology, and help manage the risks of the energy market transition for those most in need.

The report also considers transitional arrangements, and notes that investment in energy efficiency, electrification, and solar for low-income homes, combined with percentage-based concession, would reduce the cost to both governments and households.

The report recommends Energy Ministers reform energy concessions and rebates to improve equity, accessibility, and better meet people’s energy needs and changing circumstances.

The report recommends the ACCC model how percentage-based concessions can be implemented, and separate reviews to look at eligibility and processes such as consumer-focused automation to improve access to concessions and rebates.

It also outlines complementary measures that Federal, State and Territory Governments should take to support the effectiveness of energy concessions:

•           immediately lift income supports above the poverty line to improve the capacity of people on low incomes to afford energy bills;

•           co-invest in efficient electric appliances, thermal efficiency, and solar upgrade programs for low-income households;

•           shift the costs of green schemes off bills or offset the costs for people on low incomes.

ACT

The report noted that the ACT’s Utilities Concession is the second most generous concession in Australia: 89.2¢ per day in summer and $3.339 per day in winter = $700 per year. The ACT Government permanently increased the Utilities Concession by $50 per year to $750 in 2021, in addition to two substantial one-off bonus payments of $50 and $200 in 2021-22 and another one-off payment of $50 in 2022-23, in recognition of increased energy usage, lost or forgone income, and other impacts of extended lockdowns.

During the September 2021 lockdown, Chief Minister Andrew Barr increased the utilities concession by $200 to bring it to $1,000 for 2021-22. Mr Barr said this would help the most vulnerable in our community with a significant expense throughout the year.

• Financial support during longer lockdown (14 September)

However, the report states: “While the additional support was no doubt welcome by those in the ACT struggling with the impact of COVID-19, it was not necessarily an efficient targeting of expenditure to people most in need.

“It could be argued that the need for additional assistance like this illustrates the inability of fixed-rate concession to respond to price increases or give support relative to need. ‘One-off’ concession and rebate announcements are politically popular tools for Governments to demonstrate their commitment to addressing cost of living pressures, but a broader holistic review of concessions is required to better understand inequities across different concessions.”

The Utilities Concession also covers gas, water, and sewerage, but is paid on the electricity bill. The report recommends that a percentage-based energy concession in ACT be implemented on the electricity and gas component only while preserving a fixed rate for water and sewerage.